6 Money Management Tips for Self Employed Workers

As a sole trader, your finances can be complicated but are vital to both your personal life and your professional career. Self-employed workers, like yourself, often struggle with making a consistent income and completing the annual tax assessment.

It’s really important for freelancers to do a great job managing their money so their families and businesses never go without anything they need.

#1 – Check into Public Liability Insurance

Are you paying the best possible price for your business insurance, including public liability insurance? Or are you just going without public liability insurance since you’re worried the cost will be too much?

Start your money management plan by evaluating your business insurance portfolio, particularly public liability insurance.

You can do some comparison shopping by checking out Public Liability Australia’s website. Take a few minutes to get a public liability insurance quote and coverage details sent right to your inbox. Or call a Public Liability Australia agent today to get your new public liability policy set up right away.

#2 – Use a Finance App

Most sole traders find it much easier to manage incoming revenue and outgoing expenses by using a finance app. In fact, you can use a financial app that’s made specifically for self-employed people.

For example, Coconut is a banking app that helps freelancers track their money. It’s easy to set up an account (we’re talking a few minutes) by using your smartphone. Another great feature of Coconut is that it will automatically calculate your annual tax bill.

This way you always know how much you’ll need to spend when your annual assessment is done. Would you like help sending payment reminders to your clients? It’s easy to do when you use a sole trader finance app, like Coconut.

You could also try 1Tap Receipts to make things easy and accurate. One feature freelancers like a lot is that 1Tap Receipts will record receipts from every one of your business expenses, which will save you lots of money on your tax assessment.

This financial app will let you store pictures of paper receipts and keep electronic invoices on file as well. 1TapReceipts will then act as a digital bookkeeper by automatically categorizing your receipts by HMRC requirements, calculating your tax, and converting foreign currencies.

No more complicated spreadsheets and paper files. Save time and effort by relying on a financial app for self-employed individuals, like yourself.

#3 – Plan Now for the Future

As a sole trader, you know how valuable a good plan can be. That’s why you probably can anticipate the season you’ll be most busy and then you can plan for that situation. This helps you complete all your work timely, satisfy your customers, and not want to pull your hair out of your head.

To avoid a meltdown when your next client unexpectedly stops calling or when your overall sales are in a slump, make sure to be mindful with your money now. Keep up on your money management software or apps frequently so you always know what’s going on in your business account. You’ll want to always be aware of incoming payments from clients, outgoing business expenses, and your tax assessment.

It’s worthwhile to save money too. Besides an emergency cash fund, you should regularly put a set amount of money into a separate account that won’t be touched. This way you know you always have back-up funds anytime you need it.

#4 – Make Yourself a Budget

Freelancers, like yourself, know that controlling costs is an important part of maintaining your financial footing. For instance, working remotely in a coffee house or cafe can cost you money every day. After all, if you’re going to take up a seat for hours then you’ll need to buy a latte and scone during each work sesh.

Putting together a budget will help you see where you spend the most money and where you can save. Checking out your numbers might reveal that making breakfast at home is healthier and more cost-effective. Or taking public transportation instead of driving your own car will save you cash when you consider fuel prices and parking fees.

Maybe developing a budget will suggest that you’d be better off working from home! Not having to commute to an offsite location or buying meals while working remotely could be an easy way to save.

#5 – Don’t Forget About Retirement

Making sure you have emergency cash available is great, but you’ll also want to have a healthy retirement savings plan too. When you’re a sole trader or self-employed, putting money into a pension can seem overwhelming. The reality is a lot less intimidating than you might think.

In the past, you might have had a retirement plan sponsored by your employer. Now that you’re a freelancer, it’s a good time to combine all those old pension plans from different jobs into one new personal retirement plan.

If your monthly income is inconsistent, be sure to find a retirement program that lets you make one-off contributions. This means you will be allowed to make a retirement deposit in your pension plan when it suits your wallet.

#6 – File taxes early

Everyone knows tax assessments are the most boring part of being self-employed. Most freelancers put off their taxes until the very last minute. The downside to that is that your bank account may not have the funds needed to pay the taxman.

By doing your tax assessment early, you won’t have to worry about suddenly paying an extra bill. Even better, the tax assessment will give you a good idea of your spending habits versus your sales (revenue). You’ll be able to follow the financial patterns of your incoming and outgoing cash, which can help you develop a better fiscal plan for the coming year.

Being a freelancer or sole trader can be a wonderful experience for many people. If you enjoy the excitement, flexibility, and the sense of pride that comes from being your own boss, don’t let it be ruined by money matters. Take control of your cash flow by putting solid plans into action. Be assured you can find both freedom and stability being self-employed.